Ong vs. Tating

An executing court retains plenary supervisory jurisdiction to control the enforcement of its own judgments, and may, upon motion and summary hearing, direct the release of property erroneously levied upon as belonging to a stranger to the action, without finally determining ownership; this summary recourse is distinct from and coexists with the third-party claimant’s right to file a separate vindicatory action and the indemnity bond procedure under Section 17, Rule 39 of the Rules of Court, and the filing of such a bond does not oust the court of its supervisory jurisdiction.

Petitioner Hector L. Ong leased premises in Quezon City to Evangeline Roces. After an ejectment complaint and appeal, a final judgment ordered Roces and all persons claiming under her to vacate the premises and to pay rentals in arrears, attorney’s fees, and costs. The records were returned to the City Court of Quezon City for execution. During the execution, the sheriff removed the occupants and levied on several appliances found inside the leased premises. Marilyn Tating and Robert Tating — the wife and son, respectively, of Roces’s stepfather, who had also been living on the premises — claimed ownership of the seized chattels and sought their release.

• Nature of the Action: An ejectment complaint (desahucio) was instituted by petitioner Hector L. Ong against his lessee, Evangeline Roces, in the City Court of Quezon City, docketed as Civil Case No. 28309.

• The Final Judgment: On appeal to the Court of First Instance (Branch XVIII, Case No. Q-25609), a decision was rendered ordering “Evangeline Roces and all persons claiming under her to vacate plaintiff’s premises …; to pay rentals in arrears in the sum of P10,920.00 as of September 1978 and P260.00 a month from October 1978 until the premises are vacated with interest at 12% per annum; P1,000.00 as attorney’s fees and the costs.” The decision became final and executory, and the records were remanded to the City Court.

• Execution and Levy: On Ong’s application, the City Court issued a writ of execution. The sheriff cleared the premises of all occupants, including Anacleto Tating (the lessee’s stepfather and lawyer), Marilyn Tating (Anacleto’s wife), and Robert Tating. The sheriff also levied on four chattels found on the premises: a “Citizen” stereo set, a “Sanyo” television set, a “Frigidaire” refrigerator, and a “Hitachi” electric desk fan.

• Third-Party Claims and Motions: Marilyn and Robert Tating sought to retrieve the appliances from the sheriff, alleging sole ownership and disclaiming any interest of the judgment debtor, Evangeline Roces. Robert filed a third-party claim over the stereo set and Marilyn over the other items, in accordance with Section 17, Rule 39. When these claims proved unavailing, they filed identical “Urgent Motion for Suspension of Sheriff Sale and for Release of Properties Wrongfully Levied Upon on Execution” with the City Court on September 17, 1979, detailing their respective titles and praying that the scheduled execution sale be abated and the goods released to them as lawful owners.

• Ong’s Opposition and Bonds: Ong posted two surety bonds under Section 17, Rule 39 to indemnify the sheriff and allow the auction to proceed. The City Court nevertheless restrained the sale and set the motions for hearing. Ong filed an “Omnibus Opposition” contending that the motions should have been filed in the CFI (whose judgment was being executed) and that the Tatings’ remedy was to sue for damages against the bonds. He later filed a “Motion to Inhibit,” which the City Court denied on January 23, 1980; the same Order required Ong’s counsel to explain why he should not be cited for contempt.

• CFI Certiorari Proceedings: On February 7, 1980, Ong filed a petition for certiorari and prohibition with the CFI (Branch IX, Civil Case No. Q-29245) assailing the City Court’s Order and seeking to prevent further hearings. The CFI issued a status quo order, then a decision on December 15, 1981, granting the petition and making the preliminary injunction permanent. It reasoned that the Tatings were covered by the ejectment judgment and that their proper remedy was a separate and independent action, not a motion in the ejectment case.

• Appellate Court Decision: The Tatings appealed to the Court of Appeals via a petition for review. The appellate court found that the CFI had erroneously reached the merits of the execution incidents when the only issue should have been the propriety of the denial of the motion to inhibit. It set aside the CFI decision, held the denial of inhibition to be proper, and remanded the case to the City Court for further proceedings.

• Petition before the Supreme Court: Ong brought the case to the Supreme Court, praying for reversal of the appellate court’s decision and for perpetual inhibition of the City Judge from hearing the third-party claims.

• Erroneous Mode of Appeal: Petitioner contended that from the adverse CFI decision in the certiorari and prohibition case, the Tatings’ proper remedy was an ordinary appeal (writ of error) under Rule 41 and Section 39 of B.P. Blg. 129, not a petition for review under Section 22 thereof, because the CFI had acted in the exercise of original, not appellate, jurisdiction.

• Loss of Jurisdiction upon Filing of Indemnity Bond: Petitioner argued that the City Court was divested of jurisdiction to hear and determine the third-party claims once he posted the sureties required by Section 17, Rule 39, as the sole purpose of such bonds is to free the sheriff from liability and allow the execution sale to proceed irrespective of the claims.

• Separate Action as Exclusive Remedy: Corollarily, petitioner maintained that the Tatings’ only remedy after his posting of bonds was to file a separate and independent action for damages against the bonds, not to pursue their motions in the executing court.

• Supervisory Power of the Executing Court: Respondents maintained that their urgent motions were properly addressed to the City Court, which, as the court that issued the writ of execution, possessed inherent jurisdiction to supervise the conduct of the sheriff and to correct an erroneous levy on property belonging to strangers to the action.

• Right to Summary Release: Respondents argued that they were not parties to the ejectment suit and that the sheriff had seized goods belonging exclusively to them, not to the judgment debtor; the executing court could therefore, after summary hearing, order the property restored to them without the necessity of a separate suit.

• No Waiver by Bond: Respondents countered that the filing of an indemnity bond by the judgment creditor did not oust the court of its supervisory jurisdiction over the execution or foreclose their right to seek direct relief from the executing judge.

• Mode of Appeal: Whether the Tatings’ appeal from the CFI’s certiorari decision to the Court of Appeals by petition for review, instead of by ordinary appeal, was fatally defective.

• Effect of Indemnity Bond on Jurisdiction: Whether the posting of an indemnity bond by the judgment creditor under Section 17, Rule 39 caused the executing court to lose jurisdiction to hear and determine the third-party claimants’ urgent motion for suspension of the sheriff’s sale and release of the levied property.

• Proper Remedy of Third-Party Claimant: Whether the exclusive remedy of a third-party claimant whose property has been levied on execution is to file a separate and independent vindicatory action for recovery of possession and damages, excluding any recourse to the summary supervisory power of the executing court.

• Propriety of Judge’s Inhibition: Whether the City Judge should be perpetually inhibited from further hearing the third-party claims.

• Liability for Rental Arrears: Whether the Tatings, who resided with the lessee on the leased premises, were liable jointly or solidarily for the monetary judgment for back rentals.

• Mode of Appeal: The Tatings’ use of a petition for review to elevate the CFI’s certiorari judgment to the Court of Appeals was technically erroneous because the CFI acted in the exercise of original jurisdiction, where an ordinary appeal is the proper mode. The defect, however, was deemed inconsequential; it had not been raised in the appellate court, was thereby waived, and did not impede the need to finally settle the controversy.

• Effect of Indemnity Bond on Jurisdiction: The posting of the indemnity bond did not deprive the executing court of jurisdiction over the execution proceedings or the third-party claims. The bond is merely the judgment creditor’s private undertaking to assume direction and control of the sheriff’s further acts in respect of the seized property, making the creditor and his sureties principals liable for any trespass; it does not affect the court’s plenary supervisory power to ensure that execution conforms to law. The court retains authority to determine whether the sheriff acted properly and to order correction of an erroneous levy.

• Proper Remedy of Third-Party Claimant: A third-party claimant whose property is wrongfully levied upon may avail of multiple, cumulative remedies. First, the person may invoke the executing court’s supervisory jurisdiction by filing a motion or application for summary release of the property; after a summary hearing limited to determining whether the sheriff correctly seized property of the judgment debtor, the court may order the property restored to the rightful possessor without finally adjudicating title. Second, the claimant may employ the terceria procedure under Section 17, Rule 39 — filing an affidavit of title with the sheriff and, if the creditor posts a bond, subsequently suing for damages within 120 days. Neither of these summary remedies precludes the third-party claimant from filing an entirely separate and independent vindicatory action against the sheriff and the judgment creditor to recover possession and damages, even if the summary claim had been denied. Consequently, the executing court was not ousted of the authority to hear and resolve the Tatings’ urgent motion.

• Propriety of Judge’s Inhibition: No proper ground existed to disqualify the City Judge from continuing to act in the ejectment case and the incidental third-party claims. The denial of the motion to inhibit was correctly sustained by the Court of Appeals.

• Liability for Rental Arrears: The Tatings were never impleaded as parties and never served with summons in the ejectment suit; the court never acquired jurisdiction over their persons. While the ejectment judgment, insofar as it decreed ouster, could be enforced against “all persons claiming under” the lessee, the monetary award for rental arrears was not binding on the Tatings and could not be enforced against them.

• Plenary Supervisory Jurisdiction over Execution — The court that renders a judgment has unquestioned competence to act on all matters related to its enforcement, including issuing and quashing writs, determining whether property is exempt, fixing the value of property subject to third-party claims, resolving redemption questions, and supervising the acts of the sheriff and other officers. It may, upon application and after summary hearing, direct the release of property mistakenly levied upon as belonging to a stranger, without deciding title with finality. (Applied to affirm that the City Court could hear the Tatings’ urgent motion for release.)

• Third-Party Claimant’s Cumulative Remedies — A person claiming ownership of property levied on execution who is not a party to the action possesses three distinct, non-exclusive remedies: (a) a summary motion invoking the executing court’s supervisory power to order release of the property; (b) the terceria procedure under Section 17, Rule 39, involving an affidavit of title, the judgment creditor’s bond, and an action for damages against the officer within 120 days; and (c) an entirely separate and independent vindicatory action for recovery of possession and damages against the sheriff and the judgment creditor. The remedies are cumulative and the availability of one does not bar resort to the others. (Applied to reject Ong’s argument that the Tatings were limited to a separate suit.)

• Nature and Effect of the Indemnity Bond (Section 17, Rule 39) — The bond filed by the judgment creditor to indemnify the sheriff is equivalent to the personal interference of the indemnitor and his sureties, who assume direction and control of the sheriff’s future actions insofar as they constitute a trespass against the third party, making themselves principals and the sheriff their agent. It does not affect the court’s jurisdiction over the execution proceedings; the court retains full power to supervise and correct the sheriff’s acts. (Applied to reject the claim that the bond divested the City Court of jurisdiction.)

• Limitation of a Money Judgment to the Judgment Debtor’s Property — A judgment for a sum of money is enforceable only against property unquestionably belonging to the judgment debtor. To the extent that a sheriff levies on assets of a third person in which the debtor has no interest, the sheriff acts as a trespasser and is amenable to correction by the executing court. (Underpins the authority of the court to order release of wrongly levied goods.)

• Non-Binding Effect of Money Judgment on Non-Parties — A judgment for payment of money cannot bind or be enforced against persons who were never impleaded as parties and over whom the court never acquired jurisdiction, even if they resided in the leased premises and were covered by the ejectment order in its possessory aspect. (Applied to absolve the Tatings from liability for back rentals.)

• “Certain it is that the Trial Court has plenary jurisdiction over the proceedings for the enforcement of its judgments. … It may and should exercise control and supervision over the sheriff and other court officers and employees taking part in the execution proceedings, and correct them in the event that they should err in the discharge of their functions.” — Articulates the basis for the executing court’s authority to entertain the Tatings’ motion.

• “When the sheriff thus seizes property of a third person in which the judgment debtor holds no right or interest, and so incurs in error, the supervisory power of the Court which has authorized execution may be invoked by the third person. Upon due application by the third person, and after summary hearing, the Court may command that the property be released from the mistaken levy and restored to the rightful owner or possessor.” — Defines the summary remedy of a third-party claimant before the executing court.

• “The Court does not and cannot pass upon the question of title to the property, with any character of finality. It can treat of that matter only in so far as may be necessary to decide if the Sheriff has acted correctly or not.” — Delimits the scope of the summary hearing on a third-party claim.

• “That bond had absolutely no effect on the Court’s jurisdiction. It was merely ‘equivalent to the personal interference of the indemnitor and his bondsmen in the course of the proceeding … This makes them responsible for the continuance of the wrongful possession and for the sale and conversion of the goods …’” — Rejects the theory that the indemnity bond divests the court of jurisdiction.

• “… the third-party claimant … could not strictly speaking, appeal from the order denying her claim, but should file a separate reivindicatory action … or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.” — Distinguishes the separate action from the summary motion before the executing court.

• Bayer Phil., Inc. v. Agana, 63 SCRA 355 — Followed; established that a third-party claimant’s proper remedy to vindicate ownership is a separate and independent action, but recognized that the executing court may still require the sheriff to restore property if summary proof warrants, without finally deciding title. Also reaffirmed that money judgments are enforceable only against property unquestionably belonging to the judgment debtor.

• Quebral v. Garduno, 67 Phil. 316 — Followed; explained that a third-party claimant, not being a party to the action, cannot appeal from an order denying her claim but must file a separate reivindicatory action or claim for damages against the bond.

• Manila Herald Publishing Co. v. Ramos, 88 Phil. 94 — Cited; reasons of convenience dictate that a third-party claim be ventilated in a separate action to avoid injecting confusion into the main case.

• Alzua and Arnalot v. Johnson, 21 Phil. 311 — Followed; characterized the indemnity bond as the personal interference of the indemnitor assuming direction and control of the sheriff’s acts, and held that a sheriff who seizes property not belonging to the judgment debtor acts as a trespasser.

• Potenciano v. Dineros, 97 Phil. 196 — Followed; reiterated that a separate reivindicatory action is reserved to the third-party claimant despite disapproval of the claim by the court itself.

• Rejuso v. Estipona, 72 SCRA 509 — Cited; relief from impropriety in execution sought by a party to the action must be applied for with the executing court.

• Section 17, Rule 39, Rules of Court — Prescribes the terceria procedure: the third-party claimant files an affidavit of title with the sheriff; the judgment creditor may post a bond to indemnify the officer; the officer is not liable for damages unless an action is brought within 120 days; the provision expressly reserves the claimant’s right to vindicate his claim by “any proper action.” The Court interpreted this to mean that the summary terceria and the separate vindicatory suit are cumulative remedies, and that the filing of the bond does not oust the executing court’s supervisory jurisdiction.

• Section 1, Rule 70 (Forcible Entry and Unlawful Detainer) — Allows a judgment in ejectment to be enforced against the defendant and “any person or persons claiming under” the defendant. Applied to uphold the enforceability of the ejectment order against the Tatings insofar as possession was concerned, but not as to the money judgment for rentals.

• Section 49(b), Rule 39, Rules of Court — Pertains to the effect of a judgment in ejectment against persons claiming under the defendant. Cited in harmony with Section 1, Rule 70.

• Section 22, B.P. Blg. 129 (Interim Rules); Section 39, B.P. Blg. 129 — Governed the mode of appeal from CFI decisions. The Court determined that the Tatings’ use of a petition for review was technically incorrect because the CFI acted in the exercise of original jurisdiction, where ordinary appeal lies; the error was, however, waived and immaterial to the final resolution.

Yap (Chairman), Melencio-Herrera, Cruz, Feliciano, Gancayco, and Sarmiento, JJ., concurred.

N/A — No dissenting opinion.